There were two factors that triggered the Japanese to withdraw: first, a Chinese commando penetrated Hanseong (present-day Seoul) and burned storehouses at Yongsan, destroying most of what was left of the Japanese troops' depleted stock of food. Secondly, Shen Weijing made another appearance to conduct negotiations, and threatened the Japanese with an attack by 400,000 Chinese. The Japanese under Konishi Yukinaga and Katō Kiyomasa, aware of their weak situation, agreed to withdraw to the Busan area while the Chinese would withdraw back to China. A ceasefire was imposed, and a Ming emissary was sent to Japan to discuss peace terms. For the next three years, there was little fighting as the Japanese retained control of a few coastal fortresses with the rest of Korea being controlled by the Koreans.

By May 18, 1594, all the Japanese soldiers had retreated to the area around Busan and many began to make their way back to Japan. The Ming government withdrew most of its expeditionary force, but kept 16,000 men on the Korean peninsula to guard the truce.